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  Marketing Strategies that Build Value   Marketing Strategies that Build Value  Barry Silverstein  
         
 
Marketing Strategies that Build Value Value building is not a new concept. In good times and bad, smart brand marketers have always recognized the need to build value and differentiate—to make their brands a little better than competitors by adding a new feature, creating a special promotion or forging a unique alliance with another brand.

What’s different today is the targeted relevance of value building. Faced with a protracted global economic recession, established brands are searching for ways to add maximum value without cheapening their image or undermining profits. Some brands are out-smarting and out-performing their competitors because of value-building strategies.

One breakthrough example of value building is occurring in, of all places, the automotive industry. While most car manufacturers and dealers are slashing prices and offering deep discounts, one carmaker is leveraging the impact of the economy on consumers by offering something simple yet powerful and timely: peace of mind.

 
In early 2009, the Korean auto company Hyundai introduced a program called Hyundai Assurance in the US market. It made a bold promise: “Finance or lease any new Hyundai, and if in the next year you lose your income, we’ll let you return it.” Hyundai recently enhanced the offer, renamed Hyundai Assurance Plus: “If you lose your income, we’ll make your payments for 3 months while you get back on your feet, and if that’s not enough time to work things out, you can return the car with no impact on your credit.”

Hyundai built additional value into Hyundai Assurance by broadly defining the ways in which loss of income might occur. Hyundai included the following “life-changing events” in its promise: involuntary unemployment, physical disability, loss of driver’s license due to medical impairment, international employment transfer, self-employed personal bankruptcy and accidental death. Obviously the company thought carefully about the current economic environment and consumers’ potential misfortunes.

Ironically, when Hyundai cars first entered the marketplace, they were not well regarded; in fact, Hyundai was perceived as a lower-quality brand in its early days. But following in the footsteps of the Japanese automakers, Hyundai kept making its cars better and better. Ten years ago, Hyundai stunned the industry by introducing the best automobile warranty in the US—a “safety net” that gave customers the confidence they needed to purchase a vehicle from Hyundai. Hyundai Assurance is essentially a thoughtful extension of that original value-building strategy.

Hyundai is not the largest automaker, nor is it the best-known brand—yet it was Hyundai, not one of the better-known, larger brand-name manufacturers, that came up with the uniquely different concept of an “assurance” program. Hyundai Assurance is a value-building idea that not only sets Hyundai apart, it is having a measurable impact on the brand’s overall sales.

In January 2009, after the introduction of Hyundai Assurance, Hyundai’s sales were up more than 14 percent over January 2008. “Hyundai had the largest sales increase of any automaker, and it was one of only three with any increase at all,” reported CNNMoney.com. Autotrader.com said interest in Hyundai on its website “doubled year-over-year, making Hyundai the seventh most-viewed new car brand on Autotrader.com in February [2009].” Hyundai’s Sonata brand rose from 82nd place in February 2008 to 20th place in February 2009 among all new vehicles viewed on Autotrader.com.

 
In March 2009, Hyundai started offering low-rate loans on three car brands, in addition to cash-back incentives. Dave Zuchowski, vice president of sales for Hyundai Motor America, told Automotive News, “We’re looking for [Hyundai] Assurance to drive traffic and then the new rebates to help close the deals” (“Hyundai Piles On Incentives,” March 9, 2009).

Another way brands can practice value building is to promote exclusivity and offer consumers something of unique value for a limited time. The recent introduction of the 70th Anniversary Platinum Edition of the Disney movie Pinocchio typifies the category. This specially-packaged edition includes the remastered original movie in both DVD and Blu-ray formats, with lots of bonus material for which Disney is known.

The Pinocchio release is just the latest in a series of Disney Platinum Editions—part of a larger value-building strategy by Disney to release original movies from the “Disney vault” for limited time periods, thus increasing their perceived value. Disney released the first classic movie, Snow White, on DVD in 2001, but it wasn’t until the 50th Anniversary Platinum Edition of Sleeping Beauty was released last year that Disney added Blu-ray to its Platinum Editions.

Disney is already one of the world’s most recognized brands, so why do they need to issue Platinum Editions? Because Platinum Editions reinforce the image of the brand. Once the limited-release time period is over, the Platinum Edition movies are no longer available through traditional retail channels—they become “out of print” collector’s editions—and the Disney brand maintains its aura of exclusivity.

A third path to value building is more conventional but just as effective: using add-ons that enhance the value of a brand and reinforce the brand purchase decision. Apple’s iPhone stands out in this area. While it was a legitimate breakthrough brand in its own right, the iPhone was high priced and, by some standards, a risky and unproven technology. Apple rapidly overcame those early objections by opening up the iPhone to developers. The result was an iPhone “App Store” with thousands of applications for the iPhone, some of them free. In March 2008, more than 100,000 developers had downloaded the iPhone Software Development Kit in a period of just four days. By the end of 2008, Apple had recorded over 100 million application downloads.

However, some recent data suggests the interest in iPhone applications is much higher than the usage. Over 30 million downloads from Apple’s App Store were analyzed, showing that less than a third of individuals purchasing the applications use them the day after purchase (“Most iPhone apps spurned after purchase,” CNET, February 23, 2009). Less than 5 percent of those who have downloaded an application are using it after 20 days, according to CNET.

Still, Apple succeeded in demonstrating that it was once again a pioneering technology brand, and that the iPhone was an added-value platform—one that could provide a mind-numbing quantity of applications unlike any other communications device on the market.

It’s important to point out that value building needn’t be as comprehensive as Hyundai Assurance, as exclusive as Disney’s Platinum Editions or as wide-ranging as iPhone’s applications. Look at this uncomplicated value-building example: Bank of America’s Keep the Change program.

While every other bank was essentially offering the same kind of checking and savings accounts, with a few minor variations here and there, Bank of America made one little move to differentiate itself from its competitors. The bank offered to do the following for customers who opened a combined checking-savings account: “Each time you buy something with your Bank of America Check Card, we'll round your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change and grow your savings.”

This is a very simple way to build a little extra value into Bank of America’s checking and savings products—potentially attracting new customers who might begin a relationship with the bank that could lead to the use of other products and services.

Hyundai, Disney, Apple and Bank of America are representative of big name brands that don’t take their status for granted. These brand marketers know that value building is an important means of keeping their brands fit—and creating strong bonds with customers who are seeking the best value…especially in these economic times.     

[6-Apr-2009]

 
  
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

     
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Marketing Strategies that Build Value
 
 These are classic examples which remind marketers the basics of marketing 
sakumal perera - April 6, 2009
 
 Barry, Thanks for these current economy brand examples. They confirm what great brand marketers do: meet the customer where they are. I would go so far as to say that great brands co-create with their customers... 
Cheryl Sylvester, Chief Brand Coach, Your Brand Coach - April 6, 2009
 
 Barry,I agree with you that marketers must think about value. But not value in terms of price but value in terms of value offering to the consumer in terms of functional benefits, emotional benefits and brand promise. People today are not only buying on price but what value you have to offer at that price and what type of values do you represent. Fair trade coffee comes to mind at this time. Fair trade's strategic intent is to deliberately work with marginalized producers and workers in order to help them move from a position of vulnerability to one of security and economic self-sufficiency. So people are buying coffee based on fair trade as well. This is only one small example of promoting value at this time. 
john, schneider, Marque Metrix - April 6, 2009
 
 Brands which experiment unique and planned strategies are definitely the front runners. On short term we may find these strategies good but what matters most is how well these strategies effect the bottomline of organisations. Any marketing strategy which is drawn from customer expectations irrespective of the economic situation around will succeed. I definitely agree with Barry, that brands should not take their status for granted as Low performing/known brands can utilise present times to narrow the gap between their competition. I also feel that Brands should work towards increasing Share Of Confidence. Customers will prefer brands which are facing the current economic situation with Confidence. 
VAIBHAV SHARMA - April 7, 2009
 
 Very useful reading . It helped bring back learnings we learnt from kotler in the managements days - examples helped excellent understanding, Very apt in the current econimic slowdown. 
Dorothy Paul, Sr. Partner Marketing Communications, Emergency Management and Research Institute - April 8, 2009
 
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